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Tuesday, February 6, 2018

Volatile World

Prematurely Relieved,

You may recall that incoming Fed Chair, Jerome Powell let this slip (in December), about the Fed needing to unload it's short-volatility position.

"It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it’s not so much the sale, the duration; it’s also unloading our short volatility position."

[Monday, the VIX Explosion Day, was Powel's first day as Fed Chair. He had given fair warning, hadn't he?]

Betting a lot of money against the usual odds, that the stock market would just placidly rise and rise, was making "investors" some steady little returns over the last year or so. That game has suddenly closed up shop.

The big shift in volatility bets happened after the 4:00 PM market close Monday, and it was the biggest "purchase of volatility" ever, to close out those shortt-volatility bets, all at once. The market for volatility just broke, and it's not clear if it will "exist" any more.

Not only is the 116% surge in the VIX from yesterday accelerating, it is now up another 35%, above 50 - the highest level since March 2009 - extending its record surge as the vol eruption continues, and crushing the world's vol-sellers, assuring that all those who were collecting pennies in front of a steamroller, end up, well, fully steamrolled...

This spike in the Volatility Index "should" correspond to a 15% drop in stock market valuations (but who can tell with everything so manipulated? This is just the weakest layer of manipulation vaporizing.)

This article from 5 days ago is about the Fed's "QE unwind", or slowly selling back into the "markets", all of that rotten zombie flesh it has been buying for the last 9 years. That process just really started to have effects in January.

The American military is still fighting, and winning the Vietnam war, for well over 60 years now...

Thanks Eleni. Very instructive piece about our brightest military minds.

The hearts and minders and Clausewitzians atop the military establishment since 9/11 are never likely to stop citing their versions of the Vietnam War as the key to victory today; that is, they will never stop focusing on a war that was always unwinnable and never worth fighting. None of today’s acclaimed military personalities seems willing to consider that Washington couldn’t have won in Vietnam because, as former Air Force Chief of Staff Merrill McPeak (who flew 269 combat missions over that country) noted in the recent Ken Burns documentary series, “we were fighting on the wrong side.”

First, the memo demonstrates that there is a “deep state” that does not want things like elections to threaten its existence. Candidate Trump’s repeated promises to get along with Russia and to re-assess NATO so many years after the end of the Cold War were threatening to a Washington that depends on creating enemies to sustain the fear needed to justify a trillion dollar yearly military budget.

Jim Kunstler fleshes out Congressman Paul's insights with a funny bone and some bits of meat.

It is the super-duper quandary of the moment: choose between the oafish, charmless, and possibly not-so-stable-genius Leader-of-the-Free-World… and a security state that will do whatever it takes to get rid of him, for instance, engineering a nationwide hysteria over Russia.

It matters little whether you believe an individual candidate is a ‘good’ person, or a ‘bad’ person. Once in office he or she becomes a tool for the maintenance of the status quo – evidently. Why is this? Because the system is not run for your benefit. Its primary function is the concentration of power and wealth within the system itself, to serve the vested interests of a relatively tiny group of people.

Caitlin Johnstone on nuclear Armageddon: I see us as facing an immediate existential crisis as a species that needs to be dealt with right now, and people say I should be more worried about this or that conservative figure saying rude things on Twitter. We are facing the very real possibility of near-term human extinction; I don’t know how to care about the petty sectarian squabbles in America’s various political factions. It really is time for us to all get over ourselves and grow up.

Here is an article from The Saker, about Russia's rebuilding of Arctic ports and early-warning systems. Russia has a huge Arctic border to protect from attack, and more icebreakers than everybody else put together, and work to do.